Automating reporting worth it says Suncorp

Standard Business Reporting, a government initiative to increase the adoption of XBRL technology in financial reporting to government regulators is gaining traction.
Illustration: Frank Maiorana

by
Sally Rose

The automation of financial reporting has been painfully slow in Australia but Suncorp Bank is increasing speed and reducing costs by adopting a reporting language.

It was his experience working in the Caribbean, New York and Amsterdam that convinced James Corner of the benefits of eXtensible Business Reporting Language (XBRL). So when Corner returned to Australia in 2010 and joined Suncorp Bank, where he had responsibility for financial reporting, he initiated an XBRL working group. He has since been appointed financial controller.

XBRL is an information management system that organises financial data by tagging transactions when they occur with the accounting standards that apply to them. It makes it possible to generate reports automatically, eliminating the need for accountants to transpose information from multiple sets of numbers stored in different formats.

In the US, where XBRL is now mandatory for all companies regulated by the Securities and Exchange Commission, it is changing the way companies interact with analysts and rating agencies, as it makes financial reports more transparent, searchable and easy to compare.

Take-up in Australia has been slow given its use is voluntary. But the federal government’s Standard Business Reporting (SBR) regime – which uses XBRL to automate reporting to government agencies – is likely to eventually become compulsory.

But even before it is mandated, there is a compelling case for the adoption of XBRL, and educating finance executives about its benefits is on the agenda of CFO peak body Group of 100.

Pete Williams, leader of Deloitte’s Centre for the Edge, says it is difficult to say why XBRL has had a slow uptake, given it “improves compliance, reduces errors, reduces costs and makes life easier".

Related Quotes

Company Profile

Financial services is one sector that has embraced XBRL. A number of the major banks have implemented “SBR version 2.0", but this is now due to be decommissioned and replaced by version 2.1, which standardises reporting definitions across the three major regulatory bodies – the Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulation Authority (APRA) and the Australian Taxation Office (ATO).

Suncorp Bank has participated in APRA’s “XBRL 2.1 early adopters program" since January 2011. It must submit 10 reports a month to the regulator, plus another 41 every quarter. In September, it began using XBRL to produce five of those reports and by the end of 2012 all will be automated. “A process which formerly took several days has been reduced to a matter of minutes," says Corner.

The biggest costs for Suncorp have been consolidating all of the source data into one warehouse, and external consultants who worked with the technology vendor and the IT department. It has also involved a lot of manual work to set up the taxonomy, update source codes and tag data. But Corner says “once a type of transaction or action is tagged at the source, it is then automatically applied in every instance."

Computer-generated reports are reviewed manually by a senior employee who can click on movements from previous months to check the numbers. It is then submitted to another team member for double-checking before being elevated to the financial controller. Corner can see electronic notes his team has logged in the margin as he checks the report. When finished, he clicks “OK" to submit it directly to APRA.

Next year, the bank will add the necessary International Financial Reporting Standards taxonomy to automate reporting to ASIC.

The new process makes it possible to check with ease the basis for all reported data. If the regulator wants to query anything, the financial controller need only double-click the item in question to produce a report containing all the numbers behind it. Even before the trial is completed, the size of the financial reporting department has been reduced.

Improved compliance could also help Suncorp’s application to win approval to adopt “advanced measurement approaches" under the Basel II international banking reforms, increasing the sophistication of calculating risk sensitivity. “The benefits of that, while hard to quantify in advance, could be very significant," Corner says.

But it is the ability to transform internal reporting that Corner believes will be of most benefit. “Regulatory reporting in Australia is very granular, so once enough tagging has been rolled out to satisfy the regulators there’s already enough work done to see huge improvements in the quality of management reporting," he says. “This empowers better executive decision making."

This article appears in the CFO pages of the 4th edition of Capital magazine, available with the Financial Review on Wednesday December 5.